TEOCO Corporation Request for No-Action Advice Under Section 15(a) of the Securities Exchange Act — SEC — US

8010 TowersCrescent Drive,Suite joa Telephone 703-760-1600 www.venable.com VENABLE;, Vienna,Virginia 22182-2707 Facsimile 703-821-8949 Securities Exchange Act §15(a) October 20, 2005 Division of Market Regulation Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: TEOCO Corporation -Request for No-Action Advice Dear Ms. McGuire:
We are counsel to TEOCO Corporation, a Delaware corporation (the "Company" or "TEOCO"). The purpose of this letter is to request, on behalf of TEOCO, that the Staff advise that it will not recommend that the Securities and Exchange Commission (the "Commission") take any enforcement action under Section 15(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), if the Company adopts and implements a stock sale and repurchase program for its employees and certain other eligible participants pursuant to the terms of a Stock Sale and Purchase Plan (the "Plan"), which is more fully described herein, without either the Company, or those directors and employees of TEOCO who oversee and administer the Plan, registering as a broker andlor dealer pursuant to Section 15(b) of the Exchange Act. Incorporated in 1994, TEOCO is a leading provider of automated cost and revenue management solutions for the telecommunications industry. The Company engages in two primary lines of business: (1) Telecom Solutions (consisting of network cost and revenue management software and services for telecommunications companies and their enterprise customers); and (2) Respond.com (consisting of a B2C and B2B web-based internet platform to connect businesses with local purchase-ready buyers). Since its organization, TEOCO has been an employee-owned company and has provided all of its current employees and directors with the opportunity to obtain shares of its common stock through stock option and incentive plans. The Company's objective in providing its

employees with an equity interest in the Company is to give them a stake in the Company's success and thereby enable the Company to attract and retain highly qualified officers and other employees. As of September 1, 2005, the Company had 64 stockholders, all of whom were current or former employees or directors of the Company. In addition, as of September 1,2005, there were approximately 130 current and former employees and directors who held stock options granted by the Company. TEOCO has experienced significant growth, which it has attributed in large part to the Company's employee-focused philosophy. The Company's stock, however, is not registered under Section 12 of the Exchange Act and there is no public trading market for the stock. Moreover, the stock is subject to transfer restrictions.' At this time, TEOCO has no intentions or plans to list its stock on any exchange or market or effect a public offering of its stock. Because of this lack of liquidity, the ability of a stockholder of TEOCO to realize a financial return from growth in the Company's value has been limited. In order to provide some measure of liquidity to employees of the Company, and afford employees an opportunity to acquire or increase their equity stake in the Company, TEOCO is proposing to establish and implement the Plan. Under the Plan, employees and certain other eligible participants holding TEOCO common stock (the "Common Stock") will be able to sell their shares back to the Company on either one or two occasions annually on dates fixed by the Company, and on those same occasions, current employees and directors will be offered the opportunity to buy Common Stock from the Company. The Plan will include the following features:

Purpose. The Plan is intended to provide liquidity for "Eligible Participants" (as
defined below) who own Common Stock, and to offer certain Eligible Participants an opportunity to acquire an equity interest in the Company. This is achieved through a program that permits Eligible Participants to sell shares of Common Stock to the Company, or buy shares of Common Stock from the Company, on up to two predetermined "trade" days annually (each a "Trade Date"). The Plan is designed to qualify as a "compensatory benefit plan" within the 1 Pursuant to stock repurchase agreements with the Company's employees, resale of shares of TEOCO stock is subject to a right of first refusal in favor of the Company, with other transfers permitted only to certain members of an employee's family or trusts. Stock repurchase agreements with its employees also provide that, after an employee's termination, the Company may elect to buy the departing employee's stock unless certain conditions are met by the employee.

meaning of Rule 701 ("Rule 701") under the Securities Act of 1933, as amended (the "Securities AC~").~
2. Administration. A committee appointed by the Company's Board of Directors
(the "Committee") will administer the Plan. The Committee is required to establish guidelines for the operation of the Plan, including but not limited to provisions dealing with insider trading.
3. Participants. The Plan will permit current officers and other employees, as well as
directors of the Company, to purchase shares of Common Stock directly from the Company and will permit these persons and certain other eligible participants3 (collectively, "Eligible Participants") to sell to the Company shares of Common Stock they own and have held for at least one year. These transactions may occur only on up to two Trade Dates each year as designated by the Company. Any Eligible Participant who expresses a desire to sell or purchase shares of Common Stock with respect to a specific Trade Date would nevertheless be ineligible to participate for one or more of the following reasons (each such person, an "Ineligible Person"):
(1) the transaction by such person in the Common Stock would result in a violation of applicable law (e.g., such person's participation would be impermissible under Rule 701); andlor (2) such person's participation would involve a breach of fiduciary duty by such person, the Company, or any member of the Committee. The Committee will determine whether any Eligible Participant is an Ineligible Person. This authority must be exercised in a non-arbitrary and non-discriminatory manner, consistent with applicable law and all of the terms and conditions of the Plan. We believe that the terms of the Plan are consistent with the Rule 701 plan for which the Staff granted no-action relief in Marshalls Finance Limited and Lasser Marshall, Inc., SEC No-Action Letter (available June 15, 1993). These other eligible persons consist of stockholders who are (1) the Company's former employees or (2) a current or former employee's immediate family members (i.e., an employee's child, stepchild, parent, stepparent, spouse, former spouse, sibling, or legal dependant), or a trust for the benefit of such employee andlor his or her immediate family members, provided that such employee or immediate family members have more than fiftypercent of the beneficial interest in such trust. 2

Comvany as Contra-Party to Transactions. Each sale and each purchase under the
Plan will be a transaction with the Company -is., all sales by Eligible Participants will be made to the Company, and all purchases by Eligible Participants will be from the Company.
Price Determination. All sales and purchases of Common Stock that are effected
on a specific Trade Date will be at one uniform price per share as determined by the Committee. The price fixed by the Committee must be within the price range obtained from an independent, third party engaged by the Company to perform a valuation of the Company. The Committee may not fix a price per share for any Trade Date that is outside the range reported in the immediately preceding valuation unless the price per share is within the range of a "bring-down" valuation provided to the Company by the independent third party that provided the preceding valuation. A bring-down valuation must consist of an updatelvalidation by the independent third party of the most recent valuation but it need not necessarily be a formal, full-blown valuation, unless the independent third party requires one. Moreover, on any given Trade Date, the quarterly or year-end financial statements (as the case may be) that the independent third party used in determining the most recent valuation of the Company must still be current and no material developments can have occurred since the valuation was performed (and the related price range was established) &a bring-down of the valuation is or has been done by the independent third party (otherwise, the relevant Trade Date must be cancelled). As a point of clarification, prior to any Trade Date, a bring-down valuation will be required under the Plan if a material development has occurred with respect to the Company since the most recent valuation (or bring-down thereof) and the Company will be required to disclose the material development to Eligible Participants prior to the applicable Trade Date (otherwise, the relevant Trade Date must be cancelled). After announcement of the Trade Date and the trade price applicable to that Trade Date, an Eligible Participant who wishes to engage in a sale or purchase on the Trade Date must submit to the Company a trade request consisting of a purchase offer or a sale offer using a form prescribed by the Company. Under the Plan, a "Purchase Offer" is an offer by an Eligible Participant to purchase up to a specified number of shares of Common Stock and a "Sale Offer" is an offer by an Eligible Participant to sell up to a specified number of such shares, at the price announced by the Company with respect to the applicable Trade Date.
Informational Meetings; Disclosures to Particivants. Following the Committee's
determination of the price per share applicable to a Trade Date, the Committee will cause a meeting to be held for all Eligible Participants within a reasonable time prior to the Trade Date. At this meeting, representatives of the Company will address administrative and procedural

October 20, 2005 matters with respect effecting transactions under the Plan, including disclosure of the price per share applicable to such Trade Date. In addition, Eligible Participants will be afforded the opportunity to review the Company's audited (or if unavailable, its unaudited) financial statements for its the most recent fiscal year, an unaudited financial statement for its most recent fiscal quarter, a description of any material corporate developments concerning the Company and the most recent valuation of the Company (together with any bring-down thereof) by the independent third party, and to ask questions of the Company's representatives respecting the business, operations and financial condition of the Company. The Company will also upon request make the aforementioned financial statements, description of any material corporate developments concerning the Company and the most recent valuation of the Company (together with any bring-down thereof) available in electronic or written form to Eligible Participants for review at the Company's offices prior to and during the period when offers to buy and offers to sell the Company's stock may be submitted to the Company prior to the Trade Date.
7. Procedures for Sales and Purchases. The Committee is authorized to prescribe
forms to be used in connection with sale and purchase offers under the Plan and the manner in which the forms must be submitted. Sale and purchase offers, in order to be valid, must be submitted by an Eligible Participant on the prescribed form, be complete and accurate in all material respects, and be received by the Company during and prior to the close of the period provided by the Committee for delivery of the forms applicable to a particular Trade Date.
8. Cancellation/Postuonement of Trade Date. A Trade Date may be cancelled or
postponed by the Committee in connection with the occurrence of any of the following events (if written notice of the occurrence of such event is provided to the Committee by an appropriate officer of the Company) (each such event, a "Cancellation Event"): (I) a material change in the Company's cash position, cash flows, financial performance, andlor investment and capital activities; (2) material changes to financial covenants to which the Company is subject; (3) changes in applicable law; (4) material changes in the capitalization of the Company; (5) the existence of any new material nonpublic information which the Company believes to be in its best interests to keep confidential and not disclose to Eligible Participants; (6) the Committee wishes to set a Trade Date price per share outside the range previously established in the most recent, independent third-party valuation of the Company or bring-down thereof: or (7) the quarterly financial statements that an independent third party used in determining the most recent valuation of the Company or bring-down thereof will not be current as of such Trade Date or any material developments have occurred since such valuation or bring-down thereof was performed

and have not been disclosed to Eligible Participants, and in each such case a bring-down valuation has not been conducted by the independent third party.
9. Number of Shares: Allocation. The total number of shares of Company Common
Stock available for vurchase from an Eligible Particivant - and for issuance and sale bv the Company to those Eligible Participants who are current employees and directors is subject to certain minimums and maximums, each of which may be increased or decreased bv the Committee from time to time. he Plan establishes the minimum number of shares that may be offered for sale or purchase by any one person on a Trade Date, which number is currently 500 shares, and it establishes the maximum number of shares that may be offered for sale by any one person, which number currently cannot exceed 50% of the number of shares owned by such person. In addition, the Plan establishes mechanisms (I) for determining the maximum number of shares available for purchase from the Company on any given Trade Date and (2) to the extent that the number of shares subject to purchase offers exceeds the total number of shares subject to sale offers, or vice versa, for identifying the shares that will be sold and purchased so as to assure that smaller stockholders receive a fair allocation, in each case as follows:
A. Shares offered for sale bv the Company equal shares offered to be purchased from the Company. When the number of shares of Common Stock subject to offers by Eligible Participants to sell such stock to the Company (i.e., Sale Offers) is equal to the number of shares of Common Stock subject to offers by Eligible Participants to buy stock from the Company (i.e., Purchase Offers), the Company must accept all of the Purchase Offers and Sale Offers; provided, however, that the Committee (i) shall reject any such offers if a Cancellation Event has occurred; and (ii) shall reject a specific offer if the Committee determines that (a) the sale or purchase contemplated by such offer would, in its good faith judgment, violate applicable law or any provision of the Plan; or (b) the person submitting such an offer is an Ineligible Person. B. Shares offered for sale to the Companv exceed shares offered for purchase from the Company. When the number of shares of Common Stock subject to Sale Offers is greater than the number of shares of Common Stock subject to Purchase Offers, the Company must (1) accept all of the Purchase Offers and (2) accept Sale Offers based on certain Plan limitations described below establishing the maximum number of shares

that may (and are required to) be purchased by the Company pursuant to such Sale Offers and, if the number of shares subject to such Sale Offers exceeds such maximums, based on an incremental allocation formula under the Plan for calculating the number of shares to be purchased by the Company from each participating individual Eligible Participant under valid Sale Offers submitted thereby pursuant to which Sale Offers from smaller stockholders are as a general matter treated preferentially;4 provided, however, that the Committee (i) shall reject all such offers if a Cancellation Event has occurred and (ii) shall reject a specific offer if the Committee determines that (a) the sale or purchase contemplated by such offer would, in its good faith judgment, violate applicable law or any other provision of the Plan; or (b) the person submitting such offer is an Ineligible Person. When the number of shares subject to Sale Offers is greater than the number of shares subject to Purchase Offers, the Plan establishes the maximum number of shares that can (and must) be purchased by the Company in excess of the number of shares sold by the Company pursuant to Purchase Offers, which maximum number of shares is currently equal to shares having a fair market value of $100,000 for shares to be purchased by the Company in any one year and is subject to increase or decrease by the Committee. The foregoing limitation is, however, qualified by two exclusions (both of which will be applied in a non-arbitrary and non-discriminatory manner by the Committee): (1) the Company is in any event able (and required) to purchase a specific number of shares set forth in the Plan, which number is currently 500 shares and is subject to increase or decrease by the Committee, from each Eligible Participant submitting a valid Sale Offer on any given Trade Date; and (2) if on any Trade Date the aggregate fair market value of shares subject to valid Sale Offers minus the aggregate fair market value of shares subject to Purchase Offers is less than a specific amount set forth in the under this incremental allocation approach, the number of shares to be purchased from each Eligible Participant submitting a Sale Offer is based initially on the smallest number of shares subject to any valid Sale Offer. If the number of shares to be so purchased is less than the maximum number of shares that must be purchased by the Company pursuant to the terms of the Plan, additional shares will be purchased from each Eligible Participant submitting a Sale Offer based on the smallest number of unpurchased shares subject to any such valid Sale Offer. This process is repeated until the Company has purchased all of the shares that the Company is otherwise required to purchase pursuant to the terms of the Plan in connection with such Trade Date.

Plan, which amount is currently $25,000 and is subject to increase or decrease by the Committee, the Company will purchase shares subject to valid Sale Offers having a fair market value up to $25,000 (as such amount may be increased or decreased) greater than the fair market value of shares that are sold by the Company under the Plan in connection with valid Purchase Offers. The Company will announce prior to each Trade Date the total number of shares that it will buy from Eligible Participants in excess of the number of shares subject to valid Purchase Offers in the event that the Company receives more valid Sale Offers than it receives valid Purchase Offers.
C. Shares offered for sale lo the Company are less than shares offered
to be purchased from the Companv. When the number of shares of Company stock subject to Sale Offers is less than the number of shares of stock subject to Purchase Offers, the Company must (x) accept all of the Sale Offers and (y) accept Purchase Offers based on an incremental allocation formula under the Plan for calculating the number of shares to be sold by the Company to each participating individual Eligible Participant under valid Purchase Offers submitted thereby (which number of shares shall in the aggregate equal the number of shares purchased by the Company under valid Sale Offersplus an additional number of shares equal to the number of shares purchased by the Company from departing employees since the last Trade Date or within one year, whichever period is shorter) pursuant to which Purchase Offers from smaller stockholders are as a general matter treated preferentially;5 provided, however, that the Committee (i) shall reject all such offers if a Cancellation Event has occurred and (ii) shall reject a specific offer if the Committee determines that (a) the sale or purchase contemplated by such offer would, in its good faith judgment, violate applicable law or any other provision of the Plan; or (b) the person submitting such offer is an Ineligible Person. In no event can the number of shares sold by the Company on any given Trade Date The incremental allocation approach used when the number of shares of Company stock subject to Sale Offers is less than the number of shares of stock subject to Purchase Offers operates in the same manner as the incremental allocation approached used when the number of shares of Company stock subject to Sale Offers is greater than the number of shares of stock subject to Purchase Offers, which is described at Note 4, w.

exceed the number of shares purchased by the Company on such date plus an additional number of shares equal to the number of shares purchased by the Company from departing employees since the last Trade Date or within one year, whichever period is shorter.
10. Announcement of Allocation Recluirements and Plan Terms. The Plan will
provide that its allocation formulas and requirements (e.g., that smaller shareholders may receive preferential treatment under the Plan's incremental alloc&on formulas) will be disclosed and described to Eligible Participants before each Trade Date and that these allocation procedures cannot be changed unless the changes are disclosed to all Eligible Participants beforehand. All Eligible Participants will be adequately informed about how the Plan, including any amendment thereto, will work (e.g., by providing them with a copy of the Plan and having representatives of the Company available to ask questions about the Plan).
11. Requirements of Committee Membership. The Plan will provide that Committee
members cannot purchase or sell under the Plan in any Trade Date while serving on the Committee.
12. Repurchased Shares. Shares purchased by the Company under the Plan shall be
deemed to be reserved and to be available only for re-issuance under the Plan or under another Company compensatory benefit plan within the meaning of Rule 701.
13. No Similar Activities; No Commissions: Termination of Plan. The Company will
not engage in similar activities with respect to securities of any other issuers, nor will it solicit the or sale of any of its Common Stock under the plan. The Company will not receive any commission or other compensation with respect to any stock purchase or sale under the Plan, and no fees will be charged to Eligible Participants with respect to any such transaction. The Company will absorb all administrative and related costs of the Plan. The Plan will automatically terminate immediately prior to the consummation of an initial public offering by the Company.
14. Stock Transfer Restrictions. Stock purchased under the Plan will be subject to the
same contractual transfer limitations for shares acquired under the Company's other employee

October 20, 2005 stock plans,6 as well as restrictions on resale contemplated by Rule 701(g) under the Securities Act and applicable registration provisions of state securities laws.
15. Employee Administrators. In addition to the Committee, certain employees of the
Company (hereafter referred to as "Employee Administrators") will be designated to oversee and administer the Plan. The Employee Administrators will, together with the members of the Committee, have substantial responsibilities unrelated to the Plan. Their working time at the Company will be devoted substantially to the performance of their other regular Company-related duties. Each of the Employee Administrators and Committee members will perform their responsibilities related to the Plan as a part of, and not to the exclusion of, their other regular duties. None of the Employee Administrators or members of the Committee will be compensated in connection with the Plan by the payment of commissions or other remuneration based either directly or indirectly on the purchase or sale of the Company's Common Stock under the Plan.
16. Oualification of Employee Administrators. None of the persons who will serve as
Employee Administrators or as Committee members will be associated with a broker or a dealer or be subject to any "statutory disqualification" as defined in Section 3(a)(39) of the Exchange Act. Each of the persons who will initially act as Employee Administrators will have been hired by the Company prior to the establishment and implementation of the Plan to perform other duties. The Company will not hire any employees specifically for the purposes of overseeing or administering the Plan. DISCUSSION
Section 15(a) of the Exchange Act requires that any broker or dealer which is not a
natural person, or who is a natural person not associated with a broker or dealer which is a person other than a natural person, register as such under the Exchange Act. The term "broker" is generally defined under Section 3(a)(4)(A) of the Exchange Act to mean "any person engaged in the business of effecting transactions in securities for the account of others." The term "dealer" is generally defined under Section 3(a)(5)(A) of the Exchange Act to mean "any person engaged in the business of buying and selling securities for such person's own account though a broker or otherwise." However, a dealer "does not include a person that buys or sells securities for such person's own account, either individually or in a fiduciary capacity, but not as a part of a regular business." Section 3(a)(5)(B) of the Exchange Act. 6 See Note 1,

As set forth in the above-quoted definition under Section 3(a)(4) of the Exchange Act, in order to be a broker, a person must (a) "engage in the business" of effecting transactions in securities and (b) do so "for the account of others." Likewise, the definition of "dealer" under
Section 3(a)(S) of the Exchange Act contemplates that purchases and sales for one's own account
be part of the person's regular course of business.
The purpose of the Plan is to offer employees an opportunity to acquire or increase their equity stake in the Company and provide liquidity to them and other eligible stockholders of the Company. The Company will be acting as the contra party to, and be a principal in each sale and each purchase entered into under the Plan (either as a seller or a buyer). It will therefore be selling and purchasing shares of its common stock for its ownaccount and not for the account of others. It will purchase and sell only its own stock, and will buy from and sell to only its employees and other Eligible Participants. The Company will not receive any compensation with respect to any securities transaction in connection with the Plan or charge any fee with respect to any such transaction. Further, the Company will not realize any gain through a mark-up or markdown on the Common Stock it purchases or sells because all purchases and sales will be made at the price-per-share fixed for transactions on the Trade Date. That price will be set by Committee members who do not participate in the Plan, within a range established by an independent third Party. With regard to the Committee members and Employee Administrators, they will not receive any special compensation . or other direct or indirect remuneration in connection with their A responsibilities in administering the Plan. No commissions will be paid to the Company or its employees in connection with the Plan, and Committee members will not be allowed to in the Plan during their tenure on the Committee. For both Employee Administrators and Committee members, any involvement in administering the Plan will arise within the context of their regular employment or their membership on the Board and/or the Committee, as the case may be. They will not be associated persons of a broker-dealer or otherwise employed by the securities industry at the time of their activities in connection with the Plan, and none will be subject to statutory disqualification. At the time of their activities in connection with the Plan, their participation in securities purchases and sales for the account of others will be limited to the context of the Plan, which has been structured to meet the definition of a "compensatory benefit plan" under Rule 701 and which involves only the purchase and sale of the Company's own, non-public securities.

On the basis of the foregoing, we respectfully request that the Staff assure TEOCO that it will not recommend that the Commission take any enforcement action if the Company implements the above-described Plan without itself registering as a broker or dealer, and without any of the Employee Administrators or the members of the Committee registering as a broker under the Exchange Act. Should you have any questions or need additional information, please contact the undersigned. If for any reason you do not concur with the views expressed in this letter, we respectfully request an opportunity to discuss the matter with you prior to any written response. Very truly yours, James P. Dvorak, Jr. cc: Brian A. Bussey, Esq. Tara Prigge, Esq. Elizabeth R. Hughes, Esq.